Introduction

In December 2025, the Indian Parliament enacted the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (“SHANTI”) Act, a legislative overhaul of unprecedented scale in the nation’s nuclear history. By repealing and replacing the foundational Atomic Energy Act of 1962 and the contentious Civil Liability for Nuclear Damage Act (“CLNDA”) of 2010, the SHANTI Act signals a fundamental shift in India’s approach to nuclear energy.

It dismantles a six-decade-old state monopoly, reconfigures the liability regime to attract foreign investment, and aims to create a modern legal framework to achieve an ambitious target of 100 GW of nuclear capacity by 2047. This move is not merely a legislative update; it is a strategic gambit to align India’s nuclear sector with its pressing energy transition goals, climate commitments, and the insatiable industrial demand of a rapidly growing economy.

This paper delves into the evolution of India’s nuclear policy, from its idealistic origins to the stagnation that necessitated reform. It will dissect the key changes introduced by the SHANTI Act, exploring the opportunities they present for private and foreign participation. Finally, it will critically examine the inherent gaps in the new law and the implementation challenges that lie on the path to realizing India’s nuclear renaissance, weighing the promise of a clean energy future against the perils of diluted accountability and public trust.

The Legal Bedrock: The Atomic Energy Act, 1962 and The Civil Liability for Nuclear Damage Act, 2010

To govern this sensitive and strategic sector, the Atomic Energy Act of 1962 (“1962 Act”) was enacted. The 1962 Act became the cornerstone of India’s nuclear governance for over six decades, establishing a framework of absolute state control. Its provisions were shaped by two primary factors: the strategic imperative of India’s nuclear weapons programme and the scientific establishment’s promise of limitless energy.

Key provisions of the 1962 Act cemented the government’s monopoly:

• Section 3 (General powers of the Central Government): This section granted the Central Government sweeping powers to “produce, develop, use and dispose of atomic energy.” An amendment in 1987 expanded this to allow operations through “any authority or Corporation established by it or a Government company,” which paved the way for public sector undertakings like the Nuclear Power Corporation of India Limited (“NPCIL”) to become the sole operators of nuclear power plants.
• Section 14 (Control over production and use of atomic energy): This provision explicitly prohibited any private entity from acquiring, producing, possessing, or using prescribed nuclear substances or plants without a license, and stipulated that such licenses could only be granted to government entities.

This rigid state monopoly was deemed necessary to protect the secrecy of the strategic weapons programme. While the private sector was gradually engaged in the supply chain for components, the core activity of owning and operating a nuclear power plant remained exclusively in the state’s domain.

Further, CLNDA was enacted to provide for civil liability for nuclear damage and prompt compensation to the victims of a nuclear incident through a no-fault liability regime channeling liability to the operator, appointment of claims commissioner, and establishment of nuclear damage claims commission.

CLNDA, became a major deterrent for international suppliers. While it established a no-fault liability regime for operators, it contained two highly contentious provisions:

• Section 17(b): This granted an operator a statutory “right of recourse” against a supplier if a nuclear incident resulted from the supply of equipment with patent or latent defects or sub-standard services. Foreign suppliers, particularly from the US, argued that this exposed them to unlimited and unpredictable liability, a departure from international norms where liability is exclusively channeled to the operator.
• Section 46: This section stated that the provisions of the CLNDA were “in addition to, and not in derogation of, any other law.” This created ambiguity, as it potentially allowed victims of a nuclear incident to pursue claims against operators and suppliers under other Indian laws, such as the law of torts, outside the framework and financial caps of the CLNDA.

Combined with the state monopoly under the 1962 Act, which limited the domestic market, and the enormous capital required for nuclear projects, the CLNDA created a legal and commercial impasse. The nuclear sector, once a symbol of India’s scientific prowess, was now characterised by slow growth, missed targets, and a legal framework that was out of sync with global standards and domestic needs. The stage was set for a radical reform.

Introduction to the SHANTI Act: Modernising for a New Era

The SHANTI Act is the government’s definitive response to the decades of stagnation. It is a comprehensive piece of legislation that repeals both the 1962 Act and CLNDA, consolidating India’s nuclear governance under a single, modernised umbrella. The government’s rationale, as articulated by the Press Information Bureau, is clear: “To meet the national target of 100 GW nuclear capacity by 2047 and advance long-term decarbonisation by 2070, a modern legal framework is essential, which enables wider participation, leverages indigenous resources, and integrates innovation with safety.” The SHANTI Act is built on three transformative pillars: dismantling the state monopoly, overhauling the liability regime, and strengthening the regulatory architecture.

Dismantling the State Monopoly and Welcoming Private Capital

The most profound change introduced by the SHANTI Act is the end of the state’s exclusive control over nuclear power generation. Where the 1962 Act restricted licenses to government entities, the SHANTI Act opens the door for significant private sector participation.

• Eligible Entities: The SHANTI Act empowers the central government to grant licenses for key nuclear activities to a broader range of entities, including:
  • Any Indian company (excluding those incorporated outside India).
  • Joint ventures between government entities and private companies. It should be noted that the Central Government can refuse to grant a license to the joint venture if it determines that the control or ownership structure is prejudicial to national security.
  • Any other person expressly permitted by the central government.
• Permitted Activities: Private entities may now engage in activities previously reserved for the state, such as:
  • Building, owning, operating, or decommissioning a nuclear power plant or reactor.
  • Fabrication, transport, trade, or storage of nuclear fuel.

Reserved Activities: The SHANTI Act, however, maintains strategic oversight by reserving certain sensitive fuel-cycle activities exclusively for the Central Government or its wholly owned institutions. These include enrichment of uranium-235 above a certain threshold, reprocessing of spent fuel, management of high-level waste, and the production of heavy water.

This reform is a direct response to the capital-intensive nature of nuclear power. The government alone lacks the financial resources to deliver the massive expansion required to meet the 100 GW target. By enabling private participation, the SHANTI Act aims to unlock a new stream of investment, foster competition, and bring private sector efficiency and innovation to the sector. Early market signals are promising, with major Indian conglomerates like Adani, Reliance, Tata, and Vedanta having already shown interest in developing small modular reactors (“SMRs”) for captive industrial use. The Adani Group, for instance, is reportedly exploring a 1,600 MW SMR project in Uttar Pradesh in partnership with NPCIL. This opens up possibilities for captive power plants that can provide stable, round-the-clock power to data centres, heavy industries, and other energy-intensive sectors.

Overhauling the Liability Regime to Attract Global Players

The SHANTI Act systematically addresses the legal deterrents within the CLNDA that had stalled foreign participation for over a decade. It streamlines the liability framework to align it more closely with international conventions, particularly the Convention on Supplementary Compensation for Nuclear Damage (CSC).

• Dilution of Supplier Liability: The SHANTI Act removes the controversial sub-section 17(b) of the CLNDA. This eliminates the statutory right of recourse for an operator against a supplier for defective equipment. This change directly addresses the primary concern of foreign vendors, who were unwilling to enter a market with unpredictable and potentially unlimited liability. While the statutory right is gone, the SHANTI Act does not prevent an operator from negotiating liability-sharing terms with a supplier within their private contract. This shifts the risk allocation from a mandatory legal provision to a commercial negotiation.
• Exclusive Channeling of Liability: The SHANTI Act also removes Section 46 of the CLNDA. This is a critical change that establishes the SHANTI Act as the sole and exclusive legal channel for adjudicating nuclear damage claims. It prevents victims from pursuing claims under other laws, thereby providing legal certainty to operators and suppliers regarding their maximum potential liability.
• Graded Liability Cap: The SHANTI Act replaces the CLNDA’s flat operator liability cap of INR 1,500 crore with a more nuanced, tiered structure. The liability limit now ranges from INR 100 crore to INR 3,000 crore, depending on the thermal power capacity of the reactor. While the central government’s commitment to cover damages exceeding the operator’s liability remains, this graded approach tailors the financial responsibility to the scale of the installation.

These changes are designed to make the Indian nuclear market significantly more attractive to international suppliers from the United States, France, Russia, and Japan. By removing the key legal barriers that have discouraged their participation for nearly two decades, the SHANTI Act revives the possibility of executing long-stalled projects, such as the proposed Westinghouse reactors in Kovvada and French EPRs in Jaitapur. This opens the door for India to access advanced reactor technologies, including Generation III+ reactors and SMRs, accelerating its path towards the 100 GW goal.

Strengthening the Regulatory Framework

Recognising that a safe and trusted nuclear programme requires a strong and independent regulator, the SHANTI Act grants statutory status to the Atomic Energy Regulatory Board (“AERB”).

• Statutory Backing: Prior to the SHANTI Act, the AERB was constituted in 1983 through an executive order under the 1962 Act. It lacked the legal independence of a body created by an act of parliament. The SHANTI Act remedies this by formally establishing the AERB as a statutory body, putting it on par with other key Indian regulators like the Telecom Regulatory Authority of India (TRAI) and the Reserve Bank of India (RBI).
• New Institutional Mechanisms: The SHANTI Act also establishes a new dispute resolution hierarchy. It creates an Atomic Energy Redressal Advisory Council to hear appeals against orders from the central government or the AERB. Further appeals will lie before the Appellate Tribunal for Electricity, leveraging an existing judicial body.

Granting statutory backing is intended to enhance the AERB’s authority, independence, and credibility. In a sector where public perception of safety is paramount, a regulator backed by Parliament is better positioned to enforce safety standards without being susceptible to executive or commercial pressures. This is crucial for building public trust, especially as private players enter the sector. A robust and independent AERB is a prerequisite for ensuring that the expansion of nuclear power does not come at the cost of safety. Furthermore, the SHANTI Act introduces a dual-permit structure, requiring both a license from the government and a separate safety authorisation from the AERB for any activity involving radiation exposure, adding another layer of regulatory scrutiny.

It should be noted that the SHANTI Act does not create a special tribunal for adjudicating general contractual disputes, such as those between a licensee and its suppliers or contractors.

Gaps, Challenges, and the Path Forward

• From Ambitious Law to Operational Reality

While the SHANTI Act represents a bold and necessary legislative leap, its passage is not easy. The reform clears the legal underbrush that has long stalled nuclear expansion, but the path to 100 GW is fraught with significant gaps in the legislation, implementation challenges, and deep-seated political controversies. The success of this nuclear renaissance will ultimately depend on how the government navigates the treacherous terrain between attracting investment and ensuring non-negotiable safety, accountability, and public trust.

• The Liability and Safety Conundrum

The provisions designed to attract foreign vendors have ignited a firestorm of criticism, with opponents arguing that the SHANTI Act dangerously dilutes liability and compromises public safety.

• • The “Dilution” Controversy: The removal of the supplier liability clause (old Section 17(b)) and the exclusive channeling of claims (by removing old Section 46) are at the heart of the controversy. Critics have labelled the SHANTI Act a “vendor-driven” measure designed to appease foreign players at the expense of Indian citizens’ safety. The argument is that by shielding suppliers from direct legal accountability for faulty equipment, the SHANTI Act weakens a critical incentive for ensuring quality and safety.
  • Inadequacy of the Liability Cap: The maximum operator liability cap of INR 3,000 crore may be grossly inadequate. The clean-up costs of global nuclear disasters like Fukushima and Chernobyl ran into billions of dollars. In the event of a moderate-to-major accident in India, where population density around potential reactor sites is exponentially higher, the human and environmental toll would be very high, and the financial compensation offered under the SHANTI Act may be very low in comparison.
  • Regulatory Independence in Practice: While granting statutory status to the AERB is a positive step, its functional independence remains questionable. The SHANTI Act specifies that appointments to the board will be made by the central government based on recommendations from a search-cum-selection committee constituted by the Atomic Energy Commission. This structure keeps the selection process firmly within the executive’s ambit, raising concerns about the AERB’s ability to act as a truly independent watchdog, free from governmental or commercial influence.

• The Implementation Maze

The SHANTI Act provides an overarching legal framework, but its effectiveness will be determined by the detailed rules and regulations that are yet to be framed. The transition from law to operational reality is riddled with challenges.

• • The Missing Details: The SHANTI Act is silent on the granular details that will govern the sector. Critical questions remain unanswered, such as: (i) specific criteria, timelines, and procedures for granting licenses to private entities; and (ii) protocols for nuclear waste management and plant decommissioning. The credibility of the entire reform hinges on the transparency, rigor, and clarity of these forthcoming implementation norms.
  • Economic Viability for Private Players: The SHANTI Act opens the door for private investment, but it does not guarantee a commercially viable environment. Nuclear projects are notoriously capital-intensive, with long gestation periods and significant financial risks. The SHANTI Act does not provide for financial support mechanisms such as Viability Gap Funding (VGF), long-term Power Purchase Agreements (PPAs), or other tariff support structures that investors will likely seek to ensure revenue certainty and mitigate risk. Without these financial de-risking mechanisms, private capital may remain hesitant to enter the sector, regardless of the legal opening.
  • Enduring Structural and Political Hurdles: The SHANTI Act is a legal instrument; it cannot solve the deep-seated structural and political challenges that have plagued large infrastructure projects in India. Land acquisition has derailed numerous projects in the past. The complex and often lengthy process of obtaining environmental clearances presents another significant hurdle. Private investors will be wary of committing billions of dollars to projects that could be stalled indefinitely by these non-legal roadblocks.

Charting the Path Forward: Recommendations for Success

For the SHANTI Act to translate into a successful nuclear expansion, the government must move beyond the legislation and address the operational, economic, and political ecosystem.

• Diversify Technology and Fuel Cycles: India may actively explore and adopt diverse and advanced reactor designs and technology. This includes SMRs, molten salt reactors, and high-temperature gas-cooled reactors.
• Confront the Nuclear Waste Problem: No ambitious expansion of nuclear energy can succeed without a credible, long-term solution for the processing and storage of high-level nuclear waste. This is a challenge that must be addressed to ensure the sustainability of the programme and win public confidence.
• Build Public Trust Through Transparency: The government must proactively counter the narrative that the SHANTI Act is a corporate-friendly reform that compromises safety. This requires a concerted effort to build public trust through radical transparency in the regulatory process, meaningful public consultations for site selection, and robust, well-publicised emergency preparedness and response plans.

Conclusion

The SHANTI Act is arguably the most significant reform in the history of India’s nuclear programme. It is a bold and necessary attempt to break the shackles of a rigid, state-dominated past and reposition nuclear energy as a central pillar of India’s clean energy future. The legislation correctly identifies the key bottlenecks—state monopoly, lack of capital, and a prohibitive liability regime—and provides a legal framework to address them.

However, the SHANTI Act’s success is far from guaranteed. It is caught in a fundamental tension between the need to create a commercially attractive environment for private and foreign investors and the non-negotiable imperative to uphold the highest standards of safety, accountability, and public trust.

Ultimately, the SHANTI Act clears the legal pathway, but the journey to 100 GW of nuclear power is a marathon, not a sprint. Its success will hinge not just on the letter of the law, but on the spirit of its implementation. It will require the creation of a truly independent and empowered regulator, the framing of transparent and robust rules, the provision of pragmatic financial incentives, and a sustained political will to navigate the inevitable hurdles of land acquisition. The SHANTI Act has laid the foundation for a potential nuclear renaissance, but its implementation will demand a level of governance, transparency, and public engagement that matches the scale of its ambition.

Authors: Akshay Malhotra – Partner, Kush Saggi, Managing Associate, Kopal Bhargava – Associate

Disclaimer: This publication only highlights key issues and is not intended to be comprehensive. The contents of this publication do not constitute any opinion or determination on, or certification in respect of, the application of Indian law by Talwar Thakore & Associates (“TT&A”). No part of this publication should be considered an advertisement or solicitation of TT&A’s professional services.